AGS Confronts the Challenges of Growth

December 1, 2000byBarbara Spector

Last month, members of the jewelry industry gathered at New York’s fabled Rainbow Room for the American Gem Society’s “Circle of Distinction” dinner. The gala event-at which Alfred Woodill, nephew of AGS founder Robert M. Shipley, and other contributors to the industry were honored-kicked off AGS’s “Partnership for Excellence” capital campaign. The initiative’s goal is to raise $4 million, which will be used to expand AGS’s Las Vegas headquarters from one 6,000-sq.-ft. facility to a two-building, 20,500-sq.-ft. campus. Groundbreaking for the project was scheduled for October, as this issue went to press.

A multimillion-dollar fund-raising effort and a major construction project are enough to keep most associations occupied for a year. But the 66-year-old AGS isn’t stopping there. It’s developing an educational program to be held in the classrooms now under construction. It’s producing new ad campaigns aimed at keeping the organization’s name and mission in consumers’ minds. It’s rolling out the AGS Collection, a marketing and merchandising program available exclusively to AGS retailers. The AGS Laboratory, now in the midst of the holiday crunch, has added laser inscription to its menu of services. A revamping of the AGS Web site is under way. And, in order to accomplish these ambitious objectives, the organization and its lab have hired dozens of new staffers.

Why push all these projects forward at once? “Timing is important, and we think this is the best timing,” says AGS executive director Robert Bridel, who has helmed the organization for three years. “We don’t feel as if we’re biting off more than we can chew.”

AGS president Ellen Lacy of Lacy and Co., El Paso, Texas, says the board investigates the feasibility of proposed plans before approving them. “We know that we can do them before we even start; they’ve been analyzed thoroughly.”

Board directors and lay members alike praise Bridel’s leadership and express confidence in his ability to accomplish these goals. “Robert Bridel is the right man to take AGS into the 21st century,” says Rick McElvaine of Maxon’s Jewelers in Springfield, Mo. McElvaine, who has been a member for more than 20 years, cites “the energy Bob brings to the organization.” The board deserves credit, too, says Chicago designer Paul Klecka, AGS’s marketing committee chairman. “Being on the inside, I’ve seen the inspiration and vision of the board,” Klecka says. “AGS has emerged, and continues to emerge, from its perception as a traditional, rather stodgy organization.”

Balancing act. Nonetheless, AGS faces formidable challenges as it proceeds with its agenda. Although its new educational programming is designed to fill what its officials consider to be a void in jewelry industry training, it’s competing with a host of other education initiatives-including new offerings from AGS itself at major industry trade shows. Its advertising promotions, such as advertorial supplements in the Robb Report, Vanity Fair, and Modern Bride, are vying with a host of other jewelry ads for consumers’ attention. It must balance the needs of its retailer members with those of its supplier members, a constituency that remains in the minority but is becoming more visible as AGS increases its emphasis on marketing.

Above all, AGS must constantly balance the desirability of increasing its membership ranks with the need to scrupulously maintain its requirement of exemplary ethics and professionalism-an attribute cherished by its members, who view the AGS logo on their doors as their competitive edge in winning the loyalty of skeptical shoppers. “It’s the only thing left that really differentiates us from any other jeweler in the country,” says Mary Healey of Mary Healey Fine Jewelers, Little Rock, Ark. “The membership is valuable as long as everyone holds to what the membership means.”

Bridel says the organization is adamant about adhering to the standards expected of its members, who number just under 1,500, including nearly 1,300 retailers and about 200 suppliers and “sustaining members” (firms that provide services and products other than gems and jewelry). This year, the AGS board voted to open the organization to international retailers and suppliers, he says. While the number of applications this year is double the figure from last year, the number of rejections has doubled as well, Bridel notes.

AGS tries to help retailers who are rejected by its International Admissions Board, a group whose names aren’t publicized to minimize the chance that they’ll be besieged by lobbying campaigns. When an application for membership is denied, the reasons for denial are revealed to the applicant, who has the option of either appealing the denial or reapplying in one year. “If they change, we welcome them in,” says AGS vice president Andrew Meyer of Andrew Meyer Jewelry, Fort Washington, Pa.

“The resurgence of AGS as a force in the industry is obvious,” says board member Mark Moeller of R.F. Moeller Jewelers in St. Paul, Minn. “The challenge is to continue that momentum and not lose sight of what made the AGS what it is.”

Bridel’s education initiatives are aimed at fostering leadership and professionalism at AGS stores. One of the organization’s goals, he notes, is to increase the number of AGS titleholders-those who have passed its rigorous Certified Sales Associate, Registered Jeweler, Certified Gemologist, or Certified Gemologist Appraiser courses and earned the necessary educational requirements.

“The members of AGS don’t look to AGS to be another association-it’s a way of life in the jewelry industry,” Bridel says.

AGS retailers say one benefit of membership is having a nationwide network, resulting in referrals from fellow members of customers who move to their region. “With the transient nature of our society, it has proven to be a boost,” says Jerry Root of Root Jewelers, Arlington, Va.

Edifice complex. Aspiring AGS titleholders will be able to take their exams in the new building’s education facilities. The existing Robert M. Shipley Building is getting a 5,200-sq.-ft. addition that will include classrooms, one of which will contain gemological instruments. A colonnade will connect the Shipley Building to a 9,300-sq.-ft. building that the AGS lab will lease from the organization.

“The expansion of headquarters is in response to the reality of the growth and interest on the part of the industry,” says Klecka. “We just couldn’t do it with the people and the space we had.”

Bridel says the organization found in informal member surveys that “most people view Las Vegas as the ideal location” for on-site courses because of its status as a tourist mecca and the site of the massive June JCK Show.

To ensure that the classrooms will be used and to broaden the variety of course offerings in the new facility, AGS has been exploring the feasibility of inviting other industry organizations to present educational programs there, Bridel says. It also plans to conduct exams for its diploma programs on-site, offer an on-site version of some of its correspondence courses, and present its appraisal seminars-currently given at trade shows-in the new classrooms.

AGS doesn’t intend to compete with the Gemological Institute of America’s gemological courses, Bridel stresses. (AGS members must pass GIA’s Graduate Gemologist course in order to qualify for Certified Gemologist and Certified Gemologist Appraiser diplomas.) Its new course development is focused on training in an area it says is insufficiently addressed in existing educational programs: leadership development for store owners, supervisors, and managers, including human resources training, personal development, store operations, clientele management, marketing, and merchandising. Plans call for several of the programs to be in place between June and September. AGS plans to hire a second instructor to work alongside Jay Lell, its director of education.

“Our long-term goal is to offer new certification programs and continuing-education credits,” says Bridel. “That’s not possible with the short sessions we offer at trade shows.”

Board members recognize the challenge of attracting participants and the need to tailor the program content appropriately. “If it’s a good, solid program based on good, solid material, they’ll come,” Moeller says.

AGS has been presenting an “AGS track” of seminars at major trade shows since 1999. Unlike the trade shows’ own educational offerings, these sessions require an admission fee-a price the organization has found jewelers are willing to pay if the topics are sufficiently interesting. The main benefits to the organization are the delivery of quality education and the increased visibility the AGS track affords, Bridel says. “There’s not a significant revenue from it,” he says. “It allows us to convey who and what we are to members and prospective members.”

Non-AGS members are also getting to know the organization though AGS lab services, which are available to everyone in the industry. AGS laboratory reports for round brilliant diamonds include a grade for cut-from 0 to 10, with 0 representing the “Ideal” cut-a service that sets it apart from other major gemological labs. The addition of laser inscription services “makes us more of a one-stop shop,” says lab director Peter Yantzer. The growth in the lab’s staff over the past year enables his team to process more reports while keeping turnaround time short, Yantzer says.

The lab is investigating the possibility of grading the cut of fancy-shaped diamonds, a service that would be phased in, one shape at a time, over a period of years. The lab also plans to develop a different format for its grading report as well as other new products, Yantzer says.

Calling all consumers. AGS’s marketing efforts are aimed at building consumer awareness of the organization and the professionalism of its members. Marketing committee chairman Klecka sees his role as “developing the AGS brand.”

AGS officials talk of a future in which consumers view the organization’s logo as the equivalent of the Good Housekeeping seal of approval. “I see AGS using the equity that it’s been building and emerging with great visibility,” Klecka says. “The challenge is to bring that same energy to the consumer and tell the AGS story to them.”

One way in which AGS is trying to get its message out is through an alliance with the Martha Stewart Web site. Visitors to the Stewart site who have questions about jewelry are routed to the AGS site and receive a response from an AGS volunteer. The alliance led to an AGS ad in a recent issue of Martha Stewart Weddings, Bridel says. Other advertising initiatives include supplements in major consumer magazines. A recent spread in Vanity Fair included stars of the television show The View modeling jewelry. Other supplements included text intended to educate consumers about jewelry and “position AGS members as a source of jewelry-buying information,” Bridel says.

“I have had customers call me who have read the editorial in these sections-I have personally seen the results,” says Lacy.

It’s daunting to compete for consumers’ attention with major brands like De Beers, which have multimillion-dollar marketing budgets, Bridel acknowledges. But the collective buying power of the organization offers its members economies of scale, he notes.

Achieving name recognition among consumers “is a very tough battle-you know it, and I know it,” says AGS member Mary Healey. “I think it can be done, but there has to be a concerted effort on the part of the AGS and the retailer together.”

A significant development this year was a change in the bylaws to permit AGS suppliers to use the organization’s logo in their consumer ads, provided that only AGS retailers are listed in the ads. Before the change, “millions of dollars in advertising were being spent by AGS suppliers, but the AGS concept was not able to be a part of that investment,” says Klecka, who calls the rule change “a real victory.”

Another initiative involving AGS suppliers is the AGS Collection, an assortment of jewelry made by the organization’s suppliers. The collection offers three advantages to members, Bridel notes: It conveys AGS retailers not only as ethical professionals but also as purveyors of “stylish and quality jewelry”; it promotes business-to-business relationships between AGS retailers and suppliers; and, because the products are available exclusively to AGS retailers, it offers these jewelers a competitive advantage over non-members.

Suppliers become more visible. Since 1992, AGS’s annual educational Conclave has included a trade-show component-known as the AGS Jewelry Expo-that has given suppliers a more visible role within the organization. Today, the expo, which is limited to 100 supplier firms and encompasses two half-day sessions, enables supplier and retailer members to network. A rebate program enables AGS members who buy at the expo to earn a credit toward their membership dues. The 2001 Conclave will be the first to include a special educational track for suppliers, Bridel says.

In the years before the expo was instituted, “suppliers were allowed to come to the Conclave, pay dues, support the AGS-and basically got nothing for it,” Meyer says. Although supplier participation in AGS “forged a lot of friendships,” he says, “there was no mechanism for suppliers to get the message out to the retailers as to who they were.”

With the expo, the AGS Collection, and the ability of suppliers to include the AGS logo on their ads, these companies “have found a bit more of a voice,” Klecka says, noting that the organization “has expanded to serve both groups.”

While the suppliers may have become more visible, they haven’t grown significantly in number. Ten years ago, 11% of AGS members were suppliers. Today, that figure stands at 14% and includes sustaining as well as supplier members. Sustaining members represent 3% of the growth, Bridel notes.

The relationship between retailers and suppliers can be rocky, so it’s no surprise that retailer-supplier tensions sometimes occur within AGS. Some suppliers have complained that AGS membership hasn’t paid off in terms of their ability to do business with AGS retailers. But AGS board members say this shouldn’t be the goal of membership. Meyer decries the supplier who thinks that when he joins AGS, “all of a sudden the floodgates will open and every AGS jeweler will be sitting on their doorstep waiting to do business with them. That’s not a realistic thing to expect.”

A member’s main goal in joining AGS should be to support its tenets and principles, Meyer says. “Every bit of work that I’ve done for this organization has come back to me in spades, but I don’t do this to get business,” he says. “I do this because it’s a worthwhile organization.”

AGS retailers say a supplier’s AGS membership often prompts them to take another look at the company’s wares, although it’s not the sole factor in their decision to buy or not buy from the firm. “Sometimes it helps the relationship to get started,” says Peggy Page of Page-Parsons Jewelers, Grand Junction, Colo.

“We do utilize a lot of AGS suppliers because they think the same way we do,” says Maxon’s McElvaine. “But that in itself doesn’t get the door open. We have a lot of great suppliers; some are AGS suppliers, some are not.”

John Michaels of Michaels Jewelers, Waterbury, Conn., a past AGS president, notes that managers of his stores are permitted to buy from any AGS supplier to satisfy a customer special order, even if the company isn’t one of his regular suppliers. “We do that because we know AGS has a screening process,” he says.

Return on investment. AGS members acknowledge that they weigh the benefits of membership each year when it comes time to write the check for member dues. Annual company dues for all membership categories range from $525 to $3,600, based on the firm’s annual volume. Individual member dues for titleholders range from $25 to $50 annually.

“I do feel it’s important for us to stay a member,” says Page. “It’s important to us personally for our business to be able to say our store is one of the best.” Her AGS membership, Page says, “means expertise, honesty, and integrity-it puts us a step beyond the other jeweler.”

Bridel says his goal is to ensure that AGS members feel they’re getting a good return on their investment. He sees the facilities expansion and other new initiatives as “an expansion of what we offer our membership-to assist our membership in being the best they can be.”